Compliance

Crime Doesn’t Pay

In Inwood, N.Y., Dennis Cirillo is still trying to repair his Victory Toyota dealership’s reputation after it was linked to a fraud scheme, which was uncovered during a homicide investigation at a neighboring dealership.

Despite these scenarios, the industry has actually become more compliant since 1999. That was the year the National Association of Attorneys General (NAAG) adopted the “packing resolution,” which put auto dealers on the radars of state and federal regulators. But many legal watchers say how far the industry has improved will be tested by today’s economic crisis.

“Generally speaking, regulators are on alert when there’s a recession or tough economic times,” said Terry O’Loughlin, director of compliance for Reynolds and Reynolds. “Sadly, there is temptation with the credit challenge to falsify a customer’s income or history of employment … In the short term it may pay the bills, but in the long term it could create serious legal action.”

The Douglas Nissan Conspiracy

Short-term profit was the motive for the crimes allegedly committed at the now-defunct Douglas Nissan of Orange, which included the sale of used cars at inflated prices to customers who could not afford their loan payments.

Local authorities began investigating the dealership in April 2007, after a customer filed a complaint with Brannan’s office. The customer had been contacted by the dealership and coached to tell a lender about his car’s phantom features.

“They thought they could get the customer into going along with their string of lies. The consumer didn’t take it that well. He was miffed and looked to law enforcement for help,” recalled Brannan, who was surprised the consumer came directly to his office rather than filing a complaint with the Better Business Bureau (BBB) or the Department of Motor Vehicles (DMV).

Fortunately, the on-duty officer who handled the complaint also happened to be an investigator with the office’s Consumer Protection Unit. The investigator then began looking for similar complaints filed against the dealership.

Authorities soon found that between February 2005 and June 2007, 27 identity theft reports were filed with the Orange Police Department, and more than 100 complaints were filed with the DMV and the BBB about Douglas Nissan and other Douglas dealerships.

The discovery led to the raid of the dealership on July 9, 2007 — a scene that played out across local news broadcasts. Authorities seized two computers, electronic data from four additional computers, and 350 boxes containing 12,000 deal jackets from the dealership.